Builders On: Less New Homes Going Up

September 20, 2011

On Monday, Chicago Real Estate Forum discussed builder confidence falling in the market for newly built, single-family homes.

Looks like those builders were right.

The Commerce Department on Tuesday released its residential construction statistics for August 2011 to show that U.S. housing starts fell 5.0 percent to a seasonally adjusted annual rate of 571,000 units.

trucks in a row waiting for buildersThat’s the biggest decrease since April. It’s also 5.8 percent lower than the rate in August 2010.

Even though rental buildings are thriving right now, it was the multifamily sector that fell the most. While single-family housing starts declined just 1.4 percent from July, multifamily units dropped 13.5 percent.

“At this point, most builders are only looking to replenish their depleted inventories of new homes for sale, but otherwise holding off on new projects,” said National Association of Home Builders (NAHB) Chairman Bob Nielsen.

“While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production.”

But the Commerce Department did provide some positive news:

*Housing starts: The Midwest posted a 2.6 percent gain in housing starts for August, the best in the nation. The West improved 2.2 percent, the South fell 3.3 percent and the northeast plummeted 29.1 percent.

*Permit issuance: The Midwest saw a 6.3 percent gain in this area last month. The Northeast rose 3.3 percent, the West increased 11.3 percent and the South fell 1.3 percent.

*Building permits: August building permits, which can indicate future building activity, increased 3.2 percent to 620,000 units, their highest level since last December. Single-family permits rose 2.5 percent and multifamily permits gained 4.5 percent.

“Today’s numbers are completely consistent with NAHB’s forecast for the quarter, and are in keeping with the anemic economic and job growth we are seeing across most of the country,” said NAHB Senior Economist Robert Denk.

“That said, we continue to anticipate modest gains in new-home production through the end of this year with greater momentum building into 2013, and some pockets of improvement are already evident in about a dozen metros nationwide.”

Categories: Economy, New Homes

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